Chesapeake Bay Retriever in her element, a photo by PLR_Photos on Flickr.
My apologies for the long delay in posts. We had a family emergency that took us into Virginia. This picture is in homage to how well we were treated there. Maybe I'll make it part of my dream to live near water and one of these adorable water dogs.
This week starts our foray into the financials of a plan; and I may have to spend four weeks covering it instead of my planned two. Before I delve into the Uses of Funds, I want to give an overview and point of reference for all these numbers we're going to put in our plans.
In Garrett Sutton's Writing Winning Business Plans, I love how he prefaces the need for these numbers. "If your plan's purpose is to attract funding, you'll need to know how much to ask for and what your willing to give in return - interest, ownership and the like." No matter what stage of business you're in, "you will need money." "The numbers you put into your financial spreadsheets are not the point of The Financials section. Rather, the numbers are merely symbols standing in for principles. It is the principles that you need to understand."
The stage of business you're in determines which financial documents you put in your plan as well as the audience you're presenting your plan. An existing business needs an added Income Statement, Balance Sheet and possible Business Financial History. He also gives a good analogy to help entrepreneurs put it all in perspective:
Accounting Term Production Term Answers the question:
Income Statement Snapshot Am I making money?
Cash Flow Statement Video Where did the money move?
Balance Sheet Audio/Video Mix What is this worth?
Break Even Analysis Opening Night When do I start making money?
To start this section, "make the first page an overview of the financial data". What follows is your Uses of Funds statement. "Uses of Funds tells how you'll use the funds you're requesting by providing a summary of business needs, capital expenditures, working capital, total use of funds, and sources of funds. It's short and to the point. Be specific as to what the borrowed money is for, how much you need and how it will be disbursed. Give details to show whether the investment will make a profit and especially how the profit will increase." I'm glad we went through many of the tables and charts needed for this section at WIBO, I just need to adjust my old numbers to more current realistic ones.
Next week, we'll cover the Income Projection and Income Statement. Have a great one!
